Monday, January 07, 2013

Revamping allocations

As year end investment allocations were calculated, it was somewhat of a shock to realize that 74% of the assets in my trading portfolio were in equities.  It was a stealth allocation based on the lack of attractiveness of bonds as we wound down 2012 and the investment performance of equities, in particular some fortunate picks that did exceptionally well.  What to do?

The last few days have been one of investment reallocation.  A few hopeless losers with maybe sentimental attachment were sold a few days ago leaving cover for selling today.  That means selling portions of seriously winning small cap stocks that are not so liquid and buying a few that have, in opinion here, untapped potential.  Sounds easy maybe, but this is just part intuitive guesswork, part common sense.  Despite decent gains, why would one have a stock total which represents more than the daily average volume of an illiquid holding.  That would be stupid, but is where it was.  Just sold a third of that one, decent profit, but moved the stock down 30 cents.  It really just comes down to some discipline, some financial analysis, and some belief in the competitive strengths of a company, based on what has been learned over the years.  Then there is just luck!  Are the buy and sell decisions right, who knows, but part of the idea is to maintain diversification always.

In a few weeks from now investments here should be set for a 2013 baseline.  If you want to know, the belief here is that U.S. equities should/could do well in 2013 despite the headwinds of  impotent governance from D.C.  Despite all of the dysfunction in government and the overhang of stubborn unemployment numbers, 2012 turned out to be a good year in equities that just required being in the game rather than the most brilliant choices.  2013 may continue that trend.

As an aside, I'd promote RGIII for a White House advisor to lift spirits and bring some optimism to our glum and humorless Congress and our insular President.  RGIII's bad knee will not deter his contagious and spontaneous positive attitude that is so needed now.  Heck, he must already have an apartment in D.C.


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